Buying Bitcoin in The UK: All The Options

With Bitcoin booming once again more and more folks are looking for ways to get in now before the price rises even further. In this article you can learn everything you need to know about where and how to buy Bitcoin in the UK.

Before you get started however let’s talk about why you want to actually buy Bitcoin, and not some derivative product like an ETF, a future, or a CFD.

You’ve probably heard about these derivative products that don’t actually have you owning anything when you buy them. Instead you are just speculating on the price of the asset, in this case Bitcoin.

It’s been said that this is a simple way to speculate on the price of Bitcoin, and at the end of the day that is true, but these derivative products have some definite flaws and risks, especially when it comes to Bitcoin.

The biggest flaw in using a derivative like a CFD or a spread bet is that Bitcoin was created in response to the financial mess created by derivatives in the 2007-2008 financial crisis. When you use derivatives to speculate on Bitcoin price changes you’re defeating the entire purpose of Bitcoin and the cryptocurrency revolution.

And with that out of the way let’s get on and learn how to buy some Bitcoin in the UK.

Coinbase

Coinbase is based in San Francisco in the US, but that doesn’t mean UK users can’t buy Bitcoin here. They certainly can. Established in 2012, Coinbase is the largest US cryptocurrency exchange and is also ranked among the top global exchanges.

In addition to being a cryptocurrency exchange, Coinbase is also a cryptocurrency brokerage. And they offer custodial storage services for institutions, a cryptocurrency payment platform, and their own stablecoin pegged to the US dollar called the USD Coin (USDC).

While Coinbase is the largest US cryptocurrency exchange, it is also disliked by the cryptocurrency community for several reasons:

• High fees: The fees at Coinbase are considerably higher than many of its competitors. The exchange is able to get away with this because their easy to use interface makes them perfect for new cryptocurrency users who are willing to pay a little more for simplicity and convenience. The high fees can be avoided by switching over to the Coinbase Pro platform, but this can be overwhelming to new crypto traders, plus it isn’t possible to buy and sell using fiat currency at Coinbase Pro.
• Users do not control private keys: While this is true for any centralized exchange, it remains a huge negative for Coinbase in the minds of many users. Anytime coins are held in an exchange wallet the exchange retains control over the private keys. Because the private keys convey control and ownership of the Bitcoin many users avoid any wallet that does not give them access to the private keys. A popular saying is “Not your keys, not your coins.”
• Coinbase attempts to limit user privacy: As far back as 2014, there have been reports that Coinbase tracks the ways its users transfer and spend their Bitcoin. This activity was confirmed in 2019 when it was learned Coinbase had acquired Neutrino, a tech company focusing on analyzing blockchains in order to discover the identities behind addresses on those chains. Many believe Coinbase acquired this company to reduce the privacy of Bitcoin users everywhere. Coinbase also recently attempted to sell its data to the Internal Reveneue Service (IRS) and the Drug Enforcement Administration (DEA). And it was successful in winning the contract to sell its data to the Secret Service.

Coinbase Deposits and Fees

Coinbase is well known for its confusing fee schedule, and the high cost of those fees. Added to that is a limited number of deposit options, making it not as simple as other exchanges when it comes to banking. Below is a chart showing deposit methods for Coinbase:

When it comes to fees there is an entire long page on the Coinbase website to explain the fee structure. You can have a look here if you like. A more simplified version of the UK fee structure is shown in the chart below:

Buying Bitcoin at Coinbase

Buying Bitcoin at Coinbase begins with registering an account. That’s done easily enough. If you land on the home page there is a button in the upper right to “Sign Up.” Click that and fill in you first name, last name, email address, a password, and check the box to certify you’re over 18 years old. Then click the button to create your account.

Following that you’ll receive an email from Coinbase where you’ll need to click a link and verify the email. Next you’ll be asked for your phone number and an SMS is sent to the number you provide with a code to be entered to confirm the phone number.

This is the phone number that will be used later for 2FA codes, so be sure it’s one you will always have access to. Like any account these days you will also need to provide identity documents to Coinbase in order to unlock higher levels and buy, sell, and trade. And you will need to enter your account information for deposits and withdrawals.

Once you’re logged into your account look for the blue button (BUY / SELL) at the top of the home page. Clicking it will bring up a box that allows you to BUY, SELL, or CONVERT Bitcoin and the other cryptocurrencies supported at Coinbase.

Coinbase Insurance

Cryptocurrency exchanges have no protections when it comes to investor schemes or government sponsored insurance plans, however Coinbase has privately insured its client’s funds against any losses due to hacking or theft.

Coinbase Security

The first line of security at Coinbase is simply securing your own account. Coinbase helps with this by requiring some form of 2FA for all accounts. It then goes further by keeping more than 98% of all client funds in cold storage offline. And of course its insurance policy would pay for any losses due to theft or hacking.

That said, you should never store your Bitcoin in an exchange wallet. After you buy Bitcoin immediately move it to a non-custodial third-party wallet that you control. There are several reasons for this. One is that as long as the Bitcoin remains in the Coinbase wallet they have the private keys and retain control over the coins.

In other words they don’t truly belong to you. Also, Coinbase is a huge target for hackers, and just because Coinbase has never been the victim of a hack, it doesn’t mean they couldn’t be at any time. History shows that if your coins are stolen by a hacker there’s very little chance you’ll ever recover them.

Coinbase Earn

This is an interesting program that Coinbase added in 2019. It allows users to earn small amounts of alternate cryptocurrencies for watching videos and taking short quizzes about each specific altcoin. Coinbase is always adding new cryptocurrencies and users can earn over $150 in cryptocurrencies if they go through all the lessons.

Changelly

Changelly was launched back in 2013 as a prototype developed by the team at MinerGate, which was a popular mining pool at the time. Since then Changelly has gone its own way and the two businesses are no longer connected.

Changelly is a cryptocurrency exchange, but with a difference. It is used for cryptocurrency swaps, and as such it does not hold any user funds, nor does it participate in any liquidity pools. It is however, one of the most secure ways to exchange cryptocurrencies. And you can use it to buy Bitcoin in the UK using a credit card, which is incredibly convenient we think.

As you can see the credit card buying aggregates offers from other cryptocurrency selling services. Users can choose from Visa, Mastercard, Apple Pay, and bank transfer as the method of payment and can sort the offers based on these payment methods. And in addition to Bitcoin users can choose from over 130 other cryptocurrencies when they are ready to branch out.

Fees are pretty good too. Changelly finds the best offers available from providers, and it adds its own small 0.25% fee to the transaction. That sure beats the fees from other top exchanges.

After choosing your provider you’ll be asked to add your Bitcoin address on the next screen. This is where your Bitcoin will be delivered. It also means you need a Bitcoin wallet. There are a huge number to choose from and Bitcoin wallets are available for your PC or Mac, and for your Android or iOS phone.

Or you can simply use an online wallet. You’ll enter your address as shown below. Triple check to ensure you are entering the correct wallet address because Bitcoin transactions are irreversible. If you send your coins to the wrong wallet address that’s where they’ll stay.

In order to use the service you will need to sign up for whatever provider you’re using. So, Changelly will redirect you to the provider, and they will first ask for an email address to create an account with them. The provider may also ask for other information such as your name, phone number, or address. This is all in keeping with KYC requirements.

Is Changelly Safe?

Of course it’s well known that hackers can and do steal cryptocurrencies, and that there are plenty of other potential scams and fraudulent services out there. So what about Changelly? Are they trustworthy? Are they safe?

While nothing is ever guaranteed, we feel very confident in calling Changelly a safe exchange service. In fact, since it requires nothing but your email address (maintaining privacy), and it doesn’t use a custodial wallet to hold your coins, it could well be one of the safest alternatives for buying, selling, and trading cryptocurrencies.

And if you don’t believe us then look online and see what the internet has to say. You’ll find that Changelly users are pleased with the service, happy with the low transaction fees, and glad to have a service that maintains their privacy.

Paxful

Paxful is what is known as a peer-to-peer (P2P) marketplace, and it’s been connecting buyers and sellers of Bitcoin since 2015. Since that time it has grown to over 200 employees and offices that stretch from New York to Hong Kong, with offices in Manila and Talinn thrown in for good measure. All this is to say that Paxful is not some fly-by-night operation that can’t be trusted. Just check out this page for some social proofs.

So, why choose Paxful over a traditional exchange model like EXMO and Coinbase, or a swap service like Changelly? One very good reason is the huge selection of payment methods supported by Paxful. Where the other exchange services limit you to credit or debit cards and bank transfers, Paxful has a wealth of other options. No, seriously, Paxful has over 350 accepted payment methods.

Getting started at Paxful is quite easy too. Head over to the website and look at the top of the page for a button that says “Get Started.” When you click that you’ll have the choice to Log In or to Create Account. Click that button to create an account.

You’ll almost immediately receive an email from Paxful with a link to confirm your registration. Click that link and you’ll be taken to your profile page. You will need to fill in your phone number here, and provide identification documents in order to use the platform.

How to Buy Bitcoin On Paxful?

Buying BTC on Paxful is pretty straight forward. Firstly, make sure our on the Paxful homepage, select the payment method you want to use and key in the amount you want to spend and be sure to select the currency of your choice. Then just tap that ‘search for offers’ button.

You’ll then see all the offers available on the Paxful marketplace which match your search query. Select the seller that you want to buy from by clicking the ‘Buy’ button and then key in the amount of money you want to spend.

Finally you’ll be taken to a chat page where the payment instructions for the transaction will be given.

Escrow with Paxful

Paxful provides a secure escrow service for Bitcoin transactions. Once you have selected a seller you want to use and the offer is accepted by the Bitcoin seller, the Bitcoin are automatically moved into escrow.

This means that the seller can no longer cancel the trade and that the buyer has a set amount of time to make the payment. If the payment is made within the timelimit, then the Bitcoin is transferred to the buyer.

Is Paxful Safe?

Because Paxful is nothing more than a marketplace bringing buyers and sellers together some caution is certainly a good thing. That aside, Paxful is trusted by more than 3 million users globally and has an excellent reputation. It uses an escrow model that ensures sellers actually have the Bitcoin they are claiming to sell, and that it gets delivered to the buyers.

At the same time it also ensures that the buyers make good on their end of the deal and deliver the payment to the seller. It actually works very well and takes the need to trust the other party out of the equation since the Paxful system makes the trades trustless.

• To ensure your buying experience is as safe as possible follow these tips:
• Check the seller reputation score and be sure it’s as high as possible.
• Choose sellers with over 6 months on the platform and with many positive reviews.
• Keep all communication with the seller on the Paxful platform

Conclusion

As you can see there are plenty of options for buying Bitcoin in the UK, and to be honest this review has only scratched the surface. There are many other exchanges we haven’t covered here, such as Binance.

While we might not choose Binance as our best Bitcoin exchange, it is our favorite altcoin exchange, and when your ready to expand from Bitcoin into other coins you might want to give it a go too. You can access our full Binance review here.

Featured Image via Shutterstock

Source: https://www.coinbureau.com/education/buying-bitcoin-uk/